The great achievement of General Motors, writes Robert Samuelson, was to figure out a way to build not just one car for everyman, as Henry Ford had done with the Model T, but to build a whole range of cars for every price and taste. General Motors did this, under the leadership of Alfred P. Sloan,
by decentralizing operations (production, distribution) for various products among separate divisions while centralizing policy matters (personnel, finance) at the top.
This strategy worked wonders, at first. But over the years General Motors allowed its costs to increase and it stopped building cars that got people excited and for which it could charge premium prices. Sloan forsaw this problem:
too much success could be fatal. It might dull "the urge for competitive survival," which is "the strongest of all economic incentives." Companies might fail "to recognize advancing technology or altered consumer needs."
In today’s business world, the emphasis is on change, recognizing the “strategic inflection points,” in the words of former Intel CEO Andrew Grove. Its basic reality is a world of change that a business has to ride or fall off. General Motors was built to manage change. Intel is built to respond to change.
General Motors looks like it may go bankrupt. Intel is going from strength to strength.
But really, there is nothing shameful about going out of business. Every business does it, eventually. The day will come when an old and tired Intel will head for the exit, perhaps in a maelstrom of debt and bankruptcy just like today’s auto industry. That’s life.
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